MONTPELIER — They’re some of the most expensive taxpayer-funded programs in Vermont. But you won’t find a trace of them in the state budget.

And while “tax expenditures,” as they’re called in Montpelier, don’t require an appropriation from lawmakers, it doesn’t mean they aren’t costing money.

Last week, the Legislature’s Joint Fiscal Office unveiled the latest edition of a biennial report that details the costs of the scores of exemptions in Vermont’s tax code. According to projections in the nearly 100-page document, Vermont will give away more than $1.2 billion in foregone revenue next year to a diverse array of interests.

Property tax exemptions for the University of Vermont alone will cost more than $10 million in foregone revenue to the education fund. Sales tax exemptions on agriculture inputs like seed, livestock and baler twine will see the state lose out on $22 million that would have otherwise been generated by the sales tax.

Homeowners’ ability to deduct home mortgage interest payments, meanwhile, will cost Vermont nearly $19 million in income tax.

Many if not most of the exemptions are sacrosanct. Sales tax exemptions on things like prescription drugs or food, for example, or property tax exemptions for churches won’t be on the chopping block anytime soon.

But on one point in Montpelier, consensus is building.

“There’s significant agreement that we give away too much money in tax loopholes and expenditures and credits,” says Rep. David Sharpe, a Bristol Democrat and ranking member on the House Committee on Ways and Means.

When it comes to determining which should stay and which should go, agreement has been harder to reach.

“One thing you learn very quickly in this committee is that if somebody — and it doesn’t matter who it is — has a credit or exemption, they’re probably going to be pretty reluctant to let it go,” says Rep. Janet Ancel, a Calais Democrat and chairwoman of the House Committee on Ways and Means.

Just two days into the session, however, the state’s top elected official put the issue of tax expenditures center stage when he proposed eliminating one that affects about 45,000 tax filers. Gov. Peter Shumlin has dismissed out of hand any attempts to generate new revenue in Montpelier by raising broad-based taxes. Eliminating certain exemptions on broad-based taxes, however, is apparently fair game.

Shumlin’s plan would reduce by two-thirds a state “earned-income tax credit” currently used to lower tax obligations on the lowest earners in Vermont. Money generated by the elimination of the credit, Shumlin says, will be reallocated to childcare subsidies for low-income parents.

The plan drew scathing criticism from Democrats and Republicans, who said the proposal targeted a class of taxpayers who can least afford it. The Democratic governor last week stood by his plan.

“The Legislature has to have the flexibility to do some of their own thinking and I understand that,” Shumlin said. “But I’ve come up with a great plan they ought to endorse and pass. I’ve solved the problem for them — I don’t see why they need to solve it themselves.”

But in singling out the earned-income tax credit, Shumlin has ensured a more rigorous review of other tax expenditures that might be used to fund the expanded childcare subsidies, or other programs for which lawmakers are seeking funding.

Sen. Tim Ashe, a Chittenden County Democrat/Progressive and newly installed chairman of the Senate Committee on Finance, said that in his hunt for $17 million, Shumlin might have failed to scrutinize adequately the merits of the source from which he decided to take it.

“Just because the governor has settled on that particular funding source, I think the Legislature should take the broad view and say if we want to fund childcare, and use that as our starting point, then what are the array of options?” Ashe says. “And it may be that there is something that we would believe is far more appropriate to take from to give to childcare.”

Ashe isn’t ready to say whether he’s identified that more appropriate source. And while Ancel doesn’t support the idea of reducing the earned income tax credit, she says her committee won’t begin looking for places to raise new revenues until its counterpart — the House Committee on Appropriations — directs it to do so.

“We respond to an identified amount of money that needs to be raised for something, and then we try to figure out how to find that money,” Ancel says.

If leaders in the House and Senate decide to keep the proposed increase in childcare subsidies — an expansion that has wide support among all parties — but won’t abide the more controversial funding source, Ancel’s committee won’t suffer a shortage of opinions on where the money ought to come from.

Progressives in the House and Senate are working on a revenue bill that will likely include a proposal to eliminate portions of tax exemptions that tend to benefit wealthier earners.

Sharpe, who has spent years studying tax expenditures, says many of the decades-old exemptions and loopholes no longer serve the purpose for which they were created. Other tax expenditures, he says, simply aren’t fair.

An exemption on the premiums tax for insurance annuities, for example, will cost Vermont about $10.4 million in foregone revenue in fiscal year 2014. Sharpe says there’s no reason those annuities — a sort of investment instrument — deserve special treatment.

“Banks, when they sell CDs, don’t get a tax exemption, and those are very similar financial instruments,” Sharpe says. “So not only could it generate $10 million to put toward childcare, but also it’s evening the playing field.”